I haven't done any option trading yet, but I have been reading about it and think I have a reasonable understanding of the math. Please let me know where I am wrong if I make any mistakes here.

Considering opening a Margin account with WealthSimple at 4.5% (3.45% promo short period, ignoring this for the math). I intend to put $5000 in, which they say opens up $15000 in possible margin.

I plan to invest my 5000 plus 10000 more in a collection of stocks: 70-80% I have picked out for being fairly stable, reliable, and paying a reasonable dividend with a long history. Mostly banks, insurance companies, utilities. The other 20-30% are higher dividend paying, a couple REITS, BANK, HDIV. The goal for this is that the total dividend payment should slightly outpace the interest on the Margin.

As long as the Dividends outpace the Margin interest, and the entire account is cash flow neutral to positive, I intend to watch patiently. If any stocks I like go for a small dip, I might spend my dividends/new margin growth to buy, otherwise I'll let the dividends chip away at the margin.

The goal is to have a small and lower risk account that should pay for itself, while I focus on maxing my RRSP and TFSA contributions, which I can't yet but am close to.

For risk management- the total equity of the account is higher than required, so small dips I should be able to blow right through. If a dividend is cut or reduced, the interest payments on the margin are easily within my cash flow amount to cover, so even if all dividends are cut, I can afford to pay the margin interest while I decide what to do with the portfolio. I intend to create limit sell orders at 75% for my holdings, so if something crashes, I can escape with the Margin amount(ish), and all I stand to lose is my initial investment, which would suck for sure but is something I can afford to lose. Finally, I have another 5k sitting in a HISA very liquid, so if a slow downturn happens, I would have the option to put extra funds in to secure my Margin room if I choose to hold.

I did a mock up with the past 5 year returns. If I had set this up 5 years ago, the account would now be at 50k, margin reduced to under 50%, and paying almost 4k per year in dividends. I know past returns dont ensure future returns, but the best time to invest would have been 5 years ago, and the second best might be today?

I’ve looked into disability income protection as I’ve read folks say that’s important. Even more so than life insurance… as it isn’t if you aren’t able to work and get disabled, it’s WHEN. So I’m trying to put things in place while I’m in my early 30s.

I don’t have a partner. I don’t ever want children. No home or car payments etc. I don’t have DI through work.

My quotes for monthly premiums are about $200-270. I am not naive of course and I know insurance companies will fight to not pay out, despite what they advertise and sell you. If they can deem you to work even any job, they won’t pay. As in, maybe you can’t be a therapist but you can flip burgers. So they will deny your claim as you can work that job.

I’m now wondering if the money is better off in ETFs. I already contribute $500 a month. This would mean I contribute $700+ but don’t have disability income protection insurance.

Has anyone navigated DI? What was your claim process like? Was it worth it to you? Would this money be better directed in ETFs?